Beam Therapeutics Inc. — Form 10-Q Summary
Business context and reporting period
Beam Therapeutics is a development-stage biotechnology company developing precision genetic medicines based on base-editing technology and multiple delivery platforms, including ex vivo electroporation, lipid nanoparticles and AAV vectors. The filing covers the quarter and six months ended June 30, 2021, compared primarily with the corresponding 2020 periods.
All programs remained preclinical as of June 30, 2021. The company had not generated product revenue and reported only nominal license revenue from the Verve collaboration.
Financial performance and position
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| License revenue | $0.006 million | $0.006 million | $0.012 million | $0.012 million |
| Research and development expense | $45.6 million | $19.4 million | $235.7 million | $40.9 million |
| General and administrative expense | $13.4 million | $6.9 million | $23.7 million | $13.7 million |
| Net loss | $(76.3) million | $(34.2) million | $(277.8) million | $(64.7) million |
| Net loss per share | $(1.23) | $(0.69) | $(4.54) | $(1.65) |
| Net cash used in operating activities | Not separately provided | Not separately provided | $(71.1) million | $(50.2) million |
Operating loss was $59.0 million in the second quarter and $259.3 million for the first six months. The filing does not present a meaningful operating margin because revenue was immaterial relative to operating expenses.
At June 30, 2021, cash and cash equivalents were $212.0 million, marketable securities were $403.3 million, and long-term investments were $29.4 million. Cash, cash equivalents and marketable securities totaled $615.3 million. Total assets were $893.1 million and total liabilities were $344.5 million.
Debt obligations were limited primarily to equipment financing liabilities of $6.4 million, including current and long-term portions. Lease liabilities totaled $136.3 million, including $132.8 million of long-term lease liabilities. The company also reported $85.4 million of derivative liabilities and $37.6 million of contingent consideration liabilities.
Net cash used in investing activities was $292.8 million, driven primarily by net purchases of marketable securities and $27.7 million of property and equipment purchases. Net cash provided by financing activities was $413.7 million, primarily from the January private placement and the ATM offering.
Material changes versus the prior comparable period
- Second-quarter research and development expense increased by $26.2 million, or approximately 135%, primarily from higher personnel, facilities, outsourced research, laboratory supplies and stock-based compensation costs.
- Six-month research and development expense increased by $194.8 million. The increase included a one-time $155.0 million in-process research and development charge related to the Guide Therapeutics acquisition.
- Six-month net loss increased by $213.1 million to $277.8 million, reflecting the Guide acquisition charge, greater development spending and higher fair-value expense on success payment liabilities.
- General and administrative expense increased by $6.5 million in the second quarter and $9.9 million for the first six months, reflecting workforce growth, public-company costs, insurance and stock-based compensation.
- Research and development employees increased from 127 at June 30, 2020 to 218 at June 30, 2021; general and administrative employees increased from 24 to 48.
- The company completed a $260.0 million gross private placement in January 2021 and sold $300.0 million of common stock under its ATM program as of June 30, 2021. Net proceeds from these equity transactions were approximately $252.0 million and $290.5 million, respectively, through July 2021.
- The Guide acquisition closed in February 2021 for $120.0 million of common stock upfront consideration. Former Guide holders may receive up to an additional $320.0 million in technology and product milestone payments, payable in common stock.
Guidance, outlook, commentary and unusual items
- Management expects continued operating losses and negative operating cash flows for the foreseeable future and does not expect product revenue for the foreseeable future.
- Management stated that cash, cash equivalents and marketable securities at June 30, 2021 were expected to fund operations for at least the next 12 months, but additional financing will be required to support ongoing operations and growth.
- The company expected to file an IND for BEAM-101 during the second half of 2021, initiate IND-enabling studies for BEAM-102 during 2021 and nominate its first liver portfolio development candidate during the second half of 2021.
- In June 2021, Beam entered into a collaboration with Apellis. The arrangement provides for $50.0 million upfront and a $25.0 million first-anniversary payment, plus potential development, regulatory and sales milestones and royalties. The $50.0 million upfront amount was recorded as a receivable and deferred revenue at June 30 and was received in July 2021. No revenue had been recognized because activities had not commenced.
- Beam recorded $26.9 million of other income for the six months from the increase in fair value of its Verve investment. This non-operating gain materially reduced the reported net loss but was not recurring operating revenue.
- Beam recorded $44.2 million of expense for the six-month increase in the fair value of Harvard and Broad success payment liabilities. In June 2021, it settled $15.0 million owed to each institution by issuing 174,825 shares to each.
- The company is constructing a 100,000-square-foot cGMP manufacturing facility in North Carolina, expects to invest up to $83.0 million over five years and anticipates that the facility will be operational by the first quarter of 2023.
- In July 2021, the company increased the ATM authorization by an additional $500.0 million and sold an additional 108,617 shares for $11.0 million of gross proceeds through August 3, 2021.
- Key risks include the absence of human clinical data, potential off-target or permanent DNA edits, delivery-related toxicity, regulatory uncertainty, manufacturing execution, intellectual-property disputes and the need for additional capital. The company reported no material legal proceedings.
Most important facts for investors to verify
- Whether planned IND filings and IND-enabling studies occurred on the projected timelines, particularly for BEAM-101, BEAM-102 and other lead programs.
- The cash-burn rate, remaining cash and marketable securities, and the timing and terms of future equity, debt or collaboration financing.
- The recurring versus nonrecurring composition of research and development expense, especially the $155.0 million Guide acquisition charge and fair-value gains and losses.
- Progress, cost and operational timing for the North Carolina manufacturing facility.
- Milestone probability and potential dilution associated with Guide contingent consideration and collaboration obligations.
- Clinical and regulatory evidence regarding off-target editing, immune reactions, delivery-system toxicity and the permanence of genetic edits.
- The status and potential effect of the disclosed CRISPR-related patent interference and priority proceedings.